Drilling advances

Vol. 232 No. 12

Mud companies struggle with diminishing barite supplies

Ask the average person what’s the first thing that comes to mind when someone mentions barium sulfate and the reaction likely will be a squint, followed by “it sounds like something you take for a stomach disorder.”  Pose the same question to someone in the drilling fluids business and be prepared for a dissertation on how the market is conspiring against them.

Of course, the only real conspiracy is that for the past several years, available supplies of suitable barium sulfate, or more specifically its naturally occurring form commonly known as barite, have been dwindling steadily, with few new reserve bases being added to the supply mix. Consequently, those holding the available supplies of this critical drilling fluid weighting agent are milking it for all its worth, with costs seemingly rising by the day.

In the US, a large percentage of drilling-fluid-grade barite is produced from mines in Nevada, but globally the largest available reserves by far are located in China and India; therein lies the rub. In China, for instance, reserves in the once-prolific Gaungxi producing region have declined appreciably as unprecedented flooding elsewhere in the country has put a damper on production. Add to that, increased demand at home, crowded port facilities and higher fuel costs, and it doesn’t take an economic savant to realize that prices of Chinese barite will continue to rise exponentially. Then, there’s India. Like China, India is a predominate barite producer and consumer. Also like China, severe flooding during the monsoon season has forced Indian miners to cut back on production available for export.

By some estimates, the shortcomings have caused prices of Chinese and Indian barite to increase steadily with no end in sight, particularly given the global outlook for future drilling activity. According to Industrial Minerals, by October 2011 API-grade barite had jumped in a few scant months more than 75% from a high of $92/ton to reports of up to $170/ton. Traders complain that the problems of reduced output are being compounded by the bulls in China and India playing one-upmanship on prices. India raises prices, China follows suit, and on and on it goes, they contend.

The most acute shortages appears to be with API-grade 4.2 specific gravity (sg) barite,  forcing many companies to rely on lower 4.1 sg, which requires comparably higher concentrations, thereby crimping supplies even more.

Owing to the sensitivity of the supply situation and ongoing commercial negotiations, drilling fluid companies understandably are reluctant to offer many details. “The supply of barite is still tight, meaning costs have risen greatly,” said an executive of M-I SWACO, the industry’s largest drilling fluid supplier.

“The drilling activity in the US and around the world continues at a high level,” adds an executive from Halliburton’s Baroid division. “The demand for barite remains high, causing tightness in the supply markets, primarily due to issues such as logistics and lead time, barite grade and quality requirements, as well as reductions in exports from barite-producing countries.” 

Excalibur Minerals LLC, which provides barite to Newpark Drilling Fluids, said that China is its primary supplier, with India a close second.  

At the same time, Baroid added it’s not just a matter of securing the reserves, but also getting them to the well site. Barite is available in many areas of the world; however, large volumes in close proximity to major modes of transportation, sea ports and/or rail are not readily available.

For the past few years, a number of attempts have been made to conserve the supplies, including the increased use of centrifuges and other methods for reconditioning high-density mud for reuse. In late 2004, M-I SWACO unveiled its WARP micronized weighting agents for drilling and completion fluids. The technology comprises micron-sized and polymer-coated weighting agents, primarily barite, ground to 1/50th of their original size. While WARP ostensibly was conceived to conserve available barite supplies, the company claims at the same time it has been shown to minimize sag and other issues with typical barite that often makes it difficult to manage equivalent circulating densities (ECD) in drilling fluids.

With the shortages, it would stand to reason that the most viable alternative is to identify other minerals suitable for building density. The operative word, however, is suitable. Weighting agents must comply with stringent environmental restrictions on heavy-metal content.

Some have suggested hematite, the mineral form of ferric oxide, as a possible alternative to barite, but others contend it comes with far too many economic, environmental and operational drawbacks. Ironically, hematite was used widely as a weighting agent until it was supplanted in the early 1940s with the discovery of abundant and much cheaper barite. Along with its appreciably higher cost, hematite also is extremely abrasive and unless ground very finely can damage downhole pumps, motors and bits. The magnetic characteristic of hematite could also interfere with magnetized downhole tools and logging instruments.

While drilling fluid suppliers concede that the supply crunch may leave them little choice but to seek out alternatives, including going back to the future with hematite, they are just as quick to point out that until something better comes along, barite will remain the predominate weighting agent.

“There has been work done on alternatives.  As the price increases and availability of barite is reduced, weighting agents such as calcium carbonate or hematite derivatives may be options to utilize in more volume. There are other products that can be used as weighting agents as well, but so far, none are as cost-effective and high quality as barite,” says Baroid.